Number of Days Inventory Ratio

Number of Days Inventory Ratio

Formula to calculate number of days inventory:

Number of Days Inventory = 365 days / inventory turnover ratio.



Number of days inventory ratio definition and explanation:


The number of days inventory is also known as average inventory period and inventory holding period.



A high number of days inventory indicates that their is a lack of demand for the product being sold.



A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands.